Corruption Case Hits Hard in a Tough Time for Greece

ATHENS — When the authorities detained a former defense minister here last month pending trial, many Greeks found it cause for celebration, a rare case of a “big fish” meeting justice in a political culture widely seen as rife with corruption.

Prosecutors accuse the former defense minister, Akis Tsochatzopoulos, 73, a founding member of the Socialist Party and the highest-ranking Greek official ever to be detained on corruption charges, of pocketing at least $26 million in kickbacks for Greece’s purchase of submarines and missile systems and funneling the money through offshore accounts to buy property.

The unrest here that has occasionally exploded into the streets — and is expected to redraw the political landscape in Sunday’s national elections — is usually portrayed as a reaction to the grinding austerity measures imposed on the country by its international creditors. But for many Greeks, corruption is every bit as emotional an issue as the wage cuts and tax increases that have savaged their standard of living. Indeed, to many here, the two are inextricably linked.

The case of Mr. Tsochatzopoulos (pronounced zok-at-ZOP-ou-los) marks the rise — and perhaps fall — of a political culture that has dominated Greece for decades, in which alternating Socialist and center-right New Democracy governments helped spread the spoils and, critics say, the corruption, during the boom years. That system helped drive up Greece’s public debt to the point that it was forced to seek a foreign bailout in 2010.

“What usually happens if you have a patronage system, the clients tolerate corruption at the top, like with Tammany Hall,” said Harry Papasotiriou, a political science professor at Panteion University in Athens, referring to New York City’s 19th-century political machine. “But if the parties stop handing out patronage, then people are no longer as tolerant of corruption at the top.”

Mr. Tsochatzopoulos, who was kicked out of the Socialist Party in 2010 when the case against him was building, denies ever accepting kickbacks. In a statement, he described his arrest, on April 11, the day the government called early elections, as “a pre-election gift” to the two main parties.

Analysts say that the case of Mr. Tsochatzopoulos is emblematic, just the tip of the iceberg of a broader culture that appeared to operate virtually with impunity.

Last weekend, he issued a statement threatening to reveal the names he claimed were behind the “unprecedented political persecution under a legal mantle.” After a 40-year career in Greek politics, he said ominously, “I know everything.”

In a damning 203-page report, Greek prosecutors said that Mr. Tsochatzopoulos received “illegal payments” from deals signed from 1998 to 2001, when he was defense minister, including for the procurement of TOR M-1 missile systems from Russia and submarines from the German company Ferrostaal.

A court in Munich convicted two former Ferrostaal managers last year of paying bribes for contracts; the court did not name Mr. Tsochatzopoulos, but it said that generally, “submarines are purchased by politicians, not by individuals.”

Greek prosecutors also accuse Mr. Tsochatzopoulos of setting up a series of complex offshore companies and Swiss bank accounts to launder millions of dollars to buy property, including a lemon-yellow neoclassical town house on one of the most expensive streets in Athens, next to the Acropolis Museum. His wife, Vassiliki Stamati, is said to have purchased the town house in 2010 from an offshore company.

Photo

Akis Tsochatzopoulos on April 11 became the highest-ranking Greek official ever to be detained on corruption charges.Credit
Alkis Konstantinidis/European Pressphoto Agency

Ms. Stamati, 49, whom Mr. Tsochatzopoulos married in an elegant wedding in Paris in 2004, was also detained pending trial. She denies any wrongdoing. Last week, she went on a hunger strike to protest her detention and the fact she had been separated from the couple’s 5-year-old child.

The authorities have also detained the former defense minister’s daughter on money-laundering charges. They claim that a company, called Bluebell and registered in Panama, had performed only one act in Greece: selling a house to a third party who then sold it to the daughter.

“They didn’t hide very well,” said Tasos Telloglou, a political commentator and investigative journalist whose program on Skai television broke the Tsochatzopoulos story. “They never expected somebody would dig so deep.”

Mr. Telloglou said he thought the case was a step in the right direction, but not a sea change in Greek political culture. “The arterial system is still there, but the blood has run out,” he said. Many Greeks are indignant that so few high-level politicians have faced punishment for corruption scandals.

As he sat in a cafe not far from Mr. Tsochatzopoulos’s town house, Giorgos Vassilas, 52, did not appear surprised by the case. “There are thousands of Akis. They caught one,” he said, using the former minster’s first name. “Someone has to pay. All these years, nobody has paid.” Others defend Mr. Tsochatzopoulos. Some supporters have sent him gourmet products from Crete while in detention, news media outlets there reported.

In an interview, Mr. Tsochatzopoulos’s lawyer, Leonidas Kotsalis, said that the Supreme Court had confirmed last year that the statute of limitations, five years for ministers, had expired for his client.

While there is no statute of limitations for money laundering, Mr. Kotsalis said the charge could not “stand legally” because it was based on the accusations of taking bribes, for which his client could no longer be prosecuted.

He said he would urge the court to release his client from detention and seek testimony from members of the Greek state defense and foreign affairs council that existed when Mr. Tsochatzopoulos was defense minister — which would include two former Socialist prime ministers, Costas Simitis and George A. Papandreou.

Mr. Tsochatzopoulos has been detained in Athens’s high-security Korydallos Prison, in the same cell where a former monk was detained in a complex corruption case involving a land swap between the state and the Vatopedi Monastery on Mount Athos in northern Greece.

That case, in which the state lost an estimated $130 million after exchanging prime Athens real estate for much less valuable property, precipitated the demise of the center-right government of Prime Minister Kostas Karamanlis in 2009. Two ministers from the New Democracy Party stepped down in that case, but neither has faced trial.

In another case that weighs on voters’ minds, Greece has reached a $355 million out-of-court settlement with Siemens, the German electronics and engineering giant, which had been accused of bribing politicians to secure state contracts. The settlement, a combination of debt forgiveness and investment capital, is a small fraction of the $2.6 billion that a Greek parliamentary committee said the country had paid in inflated contract prices during the 1990s.

Both the Siemens and Tsochatzopoulos cases reflect the tense relations between Greece and Germany, which has demanded sharp Greek spending cuts even as its defense companies have won billions of dollars in contracts from Greece.

Back at the cafe near the Acropolis, Elias Elmazis, 49, offered his views on Mr. Tsochatzopoulos. “The greed is endless,” he said. “I just hope that justice will work in this case, because usually it doesn’t.”

A version of this article appears in print on May 3, 2012, on page A5 of the New York edition with the headline: Corruption Case Hits Hard In a Tough Time for Greece. Order Reprints|Today's Paper|Subscribe